Troubled sub-prime lender secures backing of creditors

Stricken Nottingham-based sub-prime lender Morses Club will return to court next week for the second time to seek approval for a plan that it says will secure its future.

Morses Club says that a Scheme of Arrangement has met with majority approval by its creditors. The Scheme, says the company, will help it fund a plan that it hopes will mean it can continue to trade.

Last year, Morses Club issued repeated warnings that it could enter insolvency unless it brings forward a Scheme of Arrangement after it suspended processing claims made against its “unaffordable” loans.

However, in March, the Financial Conduct Authority (FCA) has been less them impressed with the Scheme. It submitted a letter to the firm and the court ahead of the hearing, as it has “a number of concerns” with the firm’s proposals.

The FCA has concerns about the uncertainty of the funding that would be needed for the scheme, the methodology for identifying customers owed compensation and that consumers could be worse off as result of the scheme.

Morses Club held at a meeting of Scheme creditors on Thursday (May 18), where the attendees had the chance to discuss and vote on it.

A statement from the company said: “The outcome of this meeting determined that the majority of Scheme creditors voted in favour of the Scheme (that is more than 50% in number), representing 75% or more in value. The company will ask the court to sanction the Scheme at a second court hearing, which is anticipated to take place on 26 May.”